Tax season is stressful. You have to make sure you’ve got all your documents in order and that everything is filed on time. You also need to double check that the numbers you have are correct, and if they’re not then it can be a real headache.
Given how stressful tax time can be, keeping everything together can help you navigate tax season much more easily. Here are some benefits to being organized when it comes to your taxes.
It saves you time
When you run a business you need to keep track of all your income and expenses, which often means finding your receipts either digitally or in paper copy. If you stash those receipts all over the place, you’ll wind up spending hours looking for them, and there’s no guarantee you’ll find everything you need.
Organizing your documents so they’re all kept in one place (or two if you keep paper and virtual records) saves you valuable hours wondering where your receipts are, tracking them down, and ensuring you have everything you need. It also means that when you sit down to do your taxes, you won’t constantly be stopping to look for something else you just realized you need.
Have one spot in your office for your paper receipts and a main folder on your computer for digital receipts. These can be broken down further into income, expenses, utilities, and other categories as you need, but at the very least keep everything together.
It saves you money
As mentioned above, if you’re not organized there’s a good chance you’ve lost or forgotten about important receipts that could be tax deductions. As the saying goes, “out of sight, out of mind” and if you don’t have a receipt in front of you, you might just forget that you can deduct that online software subscription you purchased back in January, or that new office chair you bought.
Those deductions add up.
Also important is ensuring you’ve accounted for all your income, so you don’t wind up paying fines on income you haven’t claimed. Set aside time each month to go through all your income and your expenses and make sure the documentation is filed correctly so you can easily find it at tax time.
You’ll be better prepared for an audit
No one likes to think about what happens if they get audited, but audits happen. The more organized you are, the better prepared you’ll be. We can’t promise there will be no stress, but it will make the audit process more efficient and somewhat less stressful.
You may even get to deduct some of your organizing expenses
If you’re self-employed, you can deduct organizing expenses. If you have a home office, the same applies. And if you are a contractor or freelancer, then organizing your client files could also be deductible.
The IRS allows deduction of expenses related to business activities as long as they are ordinary and necessary (not lavish or extravagant). If you need to make purchases to organize your business receipts, these may be tax deductible.
Conclusion
Tax season is already stressful enough, without adding the stress of disorganization to it. By being methodical and keeping track of all your documentation, you can relieve some of your stress and possibly even save yourself some money.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
